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Hercules Tire & Rubber Company, Inc. v. Robison Tire Company, Inc.

United States District Court, S.D. Mississippi.

March 22, 2018

HERCULES TIRE & RUBBER COMPANY INC. PLAINTIFF/ COUNTER-DEFENDANT
v.
ROBISON TIRE COMPANY, INC. DEFENDANT/COUNTER-DEFENDANT/CROSS-PLAINTIFF
v.
AMERICAN TIRE DISTRIBUTORS HOLDINGS, INC. CROSS-DEFENDANT

          MEMORANDUM OPINION AND ORDER

          KEITH STARRETT UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on the Motion to Dismiss [22] filed by Plaintiff/Counter-Defendant Hercules Tire & Rubber Company, Inc. and Cross-Defendant American Tire Distributors Holdings, Inc. After reviewing the submissions of the parties, the record, and the applicable law, the Court finds that this motion should be granted in part and denied in part.

         I. BACKGROUND

         On March 7, 2016, Plaintiff/Counter-Defendant Hercules Tire & Rubber Company, Inc. (“Hercules”), brought suit against Robison Tire Company, Inc. (“Robison”). On June 15, 2016, Robison filed its Answer [11], which asserted numerous counterclaims against Hercules and brought in American Tire Distributors Holdings, Inc. (“ATD-H”), as an additional party. ATD-H is a competitor of Robison and became the parent corporation of Hercules in January 2014.

         Robison is a tire distributor and entered into a purchase agreement (the “HPA”) with Hercules, which was renewed in November 2013. Under the HPA, Robison was granted exclusive territory to sell certain Hercules products. In August 2014, Robison fell behind on its payments to Hercules. In September 2014, Robison and Hercules came to an agreement as to a payment plan regarding the past due invoices (the “September Agreement”). In October 2014, however, Hercules demanded full payment of the outstanding amounts at the alleged behest of ATD-H.

         Robison also had a dealer agreement with Goodyear which was set for renewal in January 2015. Robison alleges that, due to pressures placed on Goodyear by ATD-H, that agreement was not renewed.

         II. DISCUSSION

         A. Standard of Review

         To withstand a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.; see also In re Great Lakes Dredge & Dock Co., 624 F.3d 201, 210 (5th Cir. 2010) (“To be plausible, the complaint's ‘[f]actual allegations must be enough to raise a right to relief above the speculative level.'”) (quoting Twombly, 550 U.S. at 555). A complaint containing mere “labels and conclusions, or a formulaic recitation of the elements” is insufficient. Bowlby v. City of Aberdeen, Miss., 681 F.3d 215, 219 (5th Cir. 2012) (citation and internal quotation marks omitted). However, “detailed factual allegations” are not required. Iqbal, 556 U.S. at 678, 129 S.Ct. at 1949 (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955). Although courts are to accept all well-pleaded facts as true and view those facts in the light most favorable to the nonmoving party, courts are not required “to accept as true a legal conclusion couched as factual allegation.” Randall D. Wolcott, M.D., P.A. v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011) (citations omitted). “[W]hen a successful affirmative defense appears on the face of the pleadings, dismissal under Rule 12(b)(6) may be appropriate.” Miller v. BAC Home Loans Servicing, L.P., 726 F.3d 717, 726 (5th Cir. 2013) (quoting Kansa Reins. Co. v. Cong. Mortg. Corp. of Tex., 20 F.3d 1362, 1366 (5th Cir. 1994)).

         Because the choice-of-law provision of the HPA states that Ohio law is to be applied, the parties generally agree that Ohio law applies to all claims sounding in contract and that Mississippi law applies to all claims sounding in tort. Their disagreements over choice-of-law are focused on the unlawful termination claim Robison brings, and the Court will therefore address those arguments under its analysis of that claim.

         B. Joinder of ATD-H

         Hercules and ATD-H argue that ATD-H has not been properly joined in this suit because the “cross-claim” against it is not proper under Rule 13(g) and because it is not a third-party defendant under Rule 14(a). However, though Robison incorrectly labels ATD-H as a “cross-defendant” and the claims against it as “cross-claims, ” and has admitted that this was inartfully done, its Answer [11] correctly joins ATD-H under Rule 20(a)(2). Rule 13(h) allows for “the addition of a person as a party to a counterclaim ” so long as it meets the requirements of Rule 19 or 20. Fed.R.Civ.P. 13(h). Rule 20(a)(2) allows for the joinder of defendants so long as the claim arises “out of the same transaction, occurrence, or series of transactions or occurrences” and there is a common question of fact or law. Fed.R.Civ.P. 20(a)(2).

         There is no question that ATD-H was properly joined with respect to the tortious interference claim pleaded against both ATD-H and Hercules, and all the claims against only ATD-H were part of the same series of events as the claims against Hercules and involve common questions of fact. Therefore, the Court finds that, though incorrectly labeled a “cross-defendant, ” ATD-H was properly joined as a party under Rules 13(h) and 20(a)(2).

         C. Breach of Contract - HPA

         Robison claims that Hercules breached the HPA by selling their products to ATD-H within Robison's exclusive territory. However, the HPA explicitly states that “HERCULES assumes no responsibility for any PRODUCTS which may be sold in the TERRITORY by others” and that it “reserves the right to sell in the TERRITORY any of its products or services.” (HPA [11-1] at ¶ 2.) With this language, Hercules retained the right to sell its products in Robison's exclusive territory and denies responsibility if third parties, such as ATD-H, sell its products in the territory. Therefore, Hercules actions in selling ATD-H its products within Robison's exclusive territory could not have breached the HPA because the HPA specifically allowed for it. The breach of contract claim regarding Hercules' breach of the HPA, then, must fail, and it will be dismissed with prejudice.

         D. Breach of Contract - September Agreement

         Robison argues that Hercules also breached the September Agreement, which was a modification of the HPA. Hercules counters that, because the HPA contained a clause prohibiting oral modification, the September Agreement is not enforceable. This ...


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